Core Business Components in Business Analysis

In today’s competitive world, the role of a business analyst has become one of the key elements for any business entity. In order to understand the role of a business analyst it is imperative to, first of all, understand what a business is and the complexities involved in operating a business entity. The definition of a business analyst as described in the BABOK® can be decoded as follows.

What is a Business?

Let’s start with the fundamentals. What exactly is a business and why do business entities exist?

A business organization is any entity that takes in inputs (financial or non-financial resources) and converts them into outputs through various business processes. Inputs can be human resources, capital, raw materials, WIP products, knowledge, and any other form of resources.

A process is a set of interrelated activities that are carried out by a business in an organized manner in order to convert the inputs to outputs. Processes within an organization may include functions such as HR, Finance, marketing, sales, operations, IT, etc. where each function will have its own set of processes. Outputs can be products, services, or results. Products are intangible and have a set of characteristics, features, and behaviors that satisfy certain needs of stakeholders. Services are intangible but they too have features or characteristics that add value to customer expectations. A result may be a change in a condition or a capability. 

The expected outcomes are more strategic and long-term. These are defined as goals and objectives, which the functional units of organizations work towards. A goal is long-term and is defined as one year or more. Several objectives may make up one goal and are more short-term in nature and can be assigned as responsibilities of different business units. For example, the organization can have a goal of increasing market share by 20% within a 1 year time period. In order to do that, the HR department can have an objective of increasing the sales headcount by 10 and ensuring everyone has undergone proper sales training within a 6-month time period.

Why do Businesses Exist? 

Businesses operate with the motive of improving their current state. No organization intends to operate at the same level all the time. Organizations strive to make sure that the improvement in the current state is always positive and not a loss. The positive change can be financial (in terms of increasing profitability, and shareholder value) or non-financial (increase in market share, customer satisfaction, increase in company size, etc.). In order to enable this growth, the organization must undergo change. This change is to do with addressing business needs (business problems or opportunities).

The Business Context

This environment within the organization (different business units, functional units, and employees) is known as the ‘MICRO’ or Internal Environment. MESSO environment consists of immediate inbound and outbound logistics service providers in the supply chain (which includes suppliers, supplier’s suppliers, customers (wholesalers, retailers, etc.), and their customers. ‘MACRO’ a.k.a external environment consists of the external stakeholders including government, regulatory bodies, technology service providers, competitors, partners, vendors, etc.

It is important to analyze these environments to understand how they influence a business. These entities in the business context (business environment) are all known as stakeholders (individuals or groups that influence (impact) or have an interest in the organization. The influences they make are known as constraints or limitations posed by the organization.

What is Business Analysis?

The BABOK® version 3.0 defines Business Analysis as follows.

Business Analysis is the practice of enabling change in an organizational context, by defining needs & recommending solutions that deliver value to stakeholders. 

So, we see that a business analyst is someone who studies the business and its operations along with the environment in which it operates as mentioned above, and generates solution options to the needs and wants of stakeholders to enable the expected positive change in the organization. Hence, we can see that it is imperative to understand the business in its operational context before analyzing the same and giving solutions.

6 Core Concepts of Business Analysis

The BACCM model is a conceptual framework intended to aid Business Analysts in "support change in a company by articulating needs and offering solutions that deliver value to stakeholders." It has a six-core concept. Let’s discuss the 6 core concepts of business analysis below. 

Change  

Change: Change is defined as the act of transforming in response to demand. The change aims to improve an enterprise's performance through purposeful and regulated business analysis operations. There are three categories of control over change: 

• Prepare Change: What is different? What is the setting for this change? Who cares about the transition? Why? BAs ask these questions to help them manage stakeholders, set expectations, grasp the scope, and make effective decisions. 
• Provoke Change: Each modification results in a mix of value increases and reductions. BAs identify and specify future changes to determine which ones are most likely beneficial. We find issues, possibilities, and limits; we represent these needs in ways that encourage action. 
• Prevent Changes: They work hard to push the harmful change to the bottom of the priority list, invalidate faulty business cases, expose erroneous assumptions, and call into question problematic judgments. 

Need  

Need: Need and change are inextricably linked. Needs can influence change by encouraging stakeholders to act—to pursue a goal or collect rewards. Changes can also create needs (issues, opportunities, or limitations) by degrading or improving the value provided by existing solutions. Business Analysis work frequently begins with needs, and always needs to guide Business Analyst work. A need is an experience that a stakeholder has rather than a thing in and of itself. 

Solution  

A specialized method of meeting one or more needs in a particular setting. The goal is to address a problem for stakeholders or enable them to capitalize on a market opportunity. 

Stakeholder  

A stakeholder is a group or individual interested in the Change, Need, or Solution. Stakeholders are classified according to their relationship to the Needs, Changes, and Solutions. 

Value  

The value or significance of something to a stakeholder in a particular setting. The value may be both material and intangible. Potential or realized returns, profits, and improvements are examples of tangible values. Intangible value, such as a company's reputation or employee morale, is frequently a significant motivator. 

Context 

The events that influence, are influenced by and provide insight into the transformation. An ecosystem constantly changes, and context is a broad term that can refer to anything from a company's culture, mission, and demographics to government rules, rivals, products, and sales. To properly implement the change, the business analyst must first describe and analyze the context in which it is being done. 

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Business Problems & Opportunities

A business problem is some limitation within the organization or from the environment that is hindering the progress of an organization. For example, the lack of human resources, lack of knowledge and skills, unavailability of modern equipment or technology, inefficient processes, etc. can be problems that organizations face. An opportunity is some area that the business has not still ventured into, but one that can have a positive influence on the organization’s fortunes. For example, investing in new technology, R&D for new products, etc can be such opportunities.

Conclusion

Furthermore, to provide a professional domain and consistent vocabulary, the core concepts of business analysis can be used to assess the quality and completeness of the work and how each fundamental concept is addressed. All of the cores are related to one another and are equally significant. One cannot identify a need without first comprehending the co can only identify a need by first comprehending context and providing a solution by next nor provide a solution without addressing the stakeholder's point of view. Generally, when one of these basic business analysis key concepts changes, we should re-evaluate them and their relationships to ensure value delivery.